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Global Titanium Dioxide Pigment Industry has Strongest Year in Two Decades

The US$17 billion global titanium dioxide pigment industry improved profitability in 2011, with figures that TZ Minerals International Pty Ltd (TZMI) believes are the strongest in two decades.

(PRWEB) October 28, 2012

The US$17 billion global titanium dioxide pigment industry improved profitability in 2011, with figures that TZ Minerals International Pty Ltd (TZMI) believes are the strongest in two decades.

In the 8th edition of the Global TiO2 Pigment Producers Comparative Cost and Profitability Study 2012, TZMI announced that, according to its annual independent in-depth analysis of the global TiO2 sector, manufacturing cost is expected to increase dramatically in the next two to three years as legacy ore contracts roll off and are replaced by contracts that strongly favour feedstock producers.

In 2008, the TiO2 pigment industry operated in an environment of depressed profitability with record high raw material and energy costs resulting in an oversupply of TiO2 in western markets. With the onset of the Global Financial Crisis (GFC), inventories were drawn down and capacity idled, making it difficult to re-start the supply chain when the market recovered.

The tight supply situation started in 2010 and continued through 2011, with price increases announced regularly during the two-year period. As a result, global pricing increased by 8% in 2010 and almost 40% in 2011. The EBITDA margin for the industry increased from a level of 11% entering 2010 to 32% exiting 2011 (based on reporting companies).

In 2011, production (pro forma basis) increased 3.5% after demand increased out of the global recession, consumers re-stocked their supply chains, and some producers – due to lack of available product – bought ahead of needs to de-risk availability in future months. Chinese producers led the production growth with a very bullish 14.5% year-on-year increase in output.

Growth during the last five years has been led by major emerging economies – most notably China, the emerging economies of Asia-Pacific (Indonesia, Thailand, Vietnam, Philippines, etc.), Brazil, Turkey, Russia, and India; whilst the mature economies of Western Europe and North America have remained flat or declined slightly in consumption.

In 2011, profitability gains are as a result of improved sales pricing resulting from strong demand, limited supply, and low inventories. In 2011, all chloride plants were profitable according to TZMI's independent analysis. E. I. du Pont de Nemours and Co (DuPont) held the lowest cost position with its 340,000 tpa plant in DeLisle, Mississippi. Plants operated by all five of the major global producers (DuPont, Cristal Global, Huntsman Corporation, Kronos Worldwide and Tronox Inc) were in among the 20 lowest cost facilities. Half of the 20 lowest cost plants were located in China.

DuPont's DeLisle plant was again the most profitable facility in this year's study, with the company's other four chloride facilities ranking among the world's top 10 most profitable for 2010. Sichuan Lomon's 160,000 tpa Mianzhu operation was the most profitable sulfate plant, coming fourth in the global rankings.

TZMI's annual release of its Global TiO2 Pigment Producers Comparative Cost and Profitability Study is the benchmark analysis of the leading industry producers. In the 2012 edition, 22 chloride process plants are reviewed, representing 100% of the global chloride output in 2011. Another 35 sulfate process plants, representing 89% of global sulfate output, are also analysed. Most of the plants excluded are smaller operations in China.

The global TiO2 pigment industry is extremely opaque, with cost and production information tightly controlled by most producers, at a time when the industry is encountering significant cost pressures. This study is an independent analysis built up from individual plant cost structures plus an analysis of global pigment trade during 2011, providing a comparative analysis of the industry, using a consistent standard methodology.

About TZMI
TZ Minerals International (TZMI) is a global, independent consulting and publishing company with offices in Australia, China, the US and Africa. The strength of TZMI's consulting services stems from extensive practical experience in the mineral sands, titanium dioxide and coatings industries and from a comprehensive database, which has been built up over many years.

TZMI has proven expertise gained from our consultants having many years of direct operating experience in the industry in chief executive, senior operational, analytical and marketing roles.

TZMI's publications and data services support the consulting activities and ensure up-to-date, high quality and comprehensive data, analysis and information across the mineral sands, zircon and TiO2 pigment industries.